Black Mountain Resources to begin first silver production

Black Mountain Resources is on track to begin first silver production at its New Departure mine in Montana, US, within a matter of weeks, said Executive Chairman, Peter Landau.

The development drive to access high grade silver at the Bonanza Zone is underway at the mine which has a life of four years.

A drilling programme last year showed initial results of up to 365 grams per tonne silver.

The company is targeting 50,000 ounces of silver per month when it begins production in about four weeks, followed by 83,000 per month next year.

It is expected to produce 100,000 ounces of silver per annum by 2014.

The group also anticipates its Conjecture mine in Idaho will start production in the third quarter after its second phase of exploration.

Production of 100,000 ounces of silver per annum is projected for this year, followed by 700,000 ounces next year.

Landau said Black Mountain, founded in 2010, was able to begin first production in a relatively short time as it invested in historical mines which removed the need for exploration permits that take longer to gain with new projects.

The group is also at an advantage of being one of only a couple of listed silver companies on AIM.

However, Landau admits the company is not immune to falling commodity prices. Silver prices hit a more than two-year low on Monday. On the Comex on Wednesday for May 13th delivery, silver prices sat at $23.66 per ounce.

"The only way to cushion the blow [of falling prices] is to choose low cost projects with high grades," Landau told Digital Look and Sharecast.

"That's the only thing you can do and we are very sensitive to it."

Although, the former corporate lawyer expects "significant" revenues even if the price falls as low as $20 per ounce.

Landau believes it has never been a worse time for small resource companies amid difficult trading conditions. The Australian entrepreneur also highlighted the fact that technology has changed the face of markets.

"You used to need a 10-year licence to deal now anyone can to it and it's destabilised the market," he said.

"The market is a pain all around. It needs to reinvent itself."

Faced with a tough market environment, Landau said the company would keep its costs down and invest in low-risk projects.

By focusing operations in the US as opposed to Australia, the businessman said the company has reduced its costs by "three times". Wages, operational expenses and living costs are much higher in Australia's western mining state compared to the US.

Looking ahead, Landau said the group will keep its focus on exploration at the New Departure an Conjecture mines.